Wells Fargo dropped last week, but one investor apparently
thinks that it will rebound.
optionMONSTER's monitoring programs detected the sale of 17.341
November 35 puts for $1.68. An equal number of October 35 puts were
bought at the same time for $1.20, but volume was below open
interest. This suggests that an existing
was closed in the front month and rolled forward in time.
The trader probably sold the Octobers before last week's earnings
report, looking for strong results. But the shares fell after
revenue missed expectations, and now he or she is now on the hook
to purchase shares if they stay below $35. So trader bought them
back and sold the Novembers, garnering an additional $0.48 of
income while staying in the trade for another month.
Given that puts have a
, they stand to benefit from WFC pushing higher over the next five
weeks and are essentially long the stock. (See our
WFC is down 1.64 percent to $33.69 this afternoon. Despite dropping
Friday after releasing earnings results, it's still up 22 percent
so far this year.
The put roll was the largest trade in any company so far in the
session. The activity pushed total option volume in the name to
almost twice its daily average.